Monday, April 28, 2008

Rotation Out of Oil Stocks?

I think we'll see some short-term rotation out of oil and oil-related stocks. This is due to the fear of a strengthening dollar. The price of oil, which has jumped partially due to the weak dollar, could also fall. Although this could happen, it will only be temporary. As far as stocks go, I wouldn't sell much. I'm definitely holding Noble Corp. (NE) and am hoping for a pullback to buy more shares. I'd also be interested in National Oilwell Varco (NOV) in the low 60's.

Barron's had a bullish cover this weekend, but I'm worried about the market losing momentum as earnings season wraps up.

3 comments:

Bill G. said...

I would be interested in your thoughts on Pengrowth Energy Trust (PGH). Also, a small Florida insurance company, Universal Insurance Holdings (UVE). Thanks...

Michael said...

For Pengrowth, the fundamentals look good. Although the crude oil prices are well-documented, it is natural gas that has been drawing attention lately (take a look at the recent chart for CHK). Energy trusts have great dividends payouts. I'd wait until oil and gas prices slow up for an entry point.

On UVE, its a small stock, so its important to get used to how it trades. But its cheap. Trades for 3.60/share and they are sitting on 5.38/share in cash. Large percentage of shares owned by insiders too. I'd want to know a little more about their business before I'd buy, but on paper it appears to have some value.

Thanks for the comments, I appreciate it!

Bill G. said...

Hey Michael, Thanks for the info and your insightful comments on PGH and UVE. I currently hold shares in both. I have a nice, unrealized capital gain on (PGH) and was considering buying more shares of (UVE). I appreciate your having a look at the two, it has helped me finalize my decision to keep (PGH) and buy more (UVE). Thanks again, Bill.